Archive for November, 2010

While tax rates for top income earners have dropped to a fraction of their mid-20th century levels, the US has found it increasingly difficult to meet the basic needs of its people. Sure, wars, bank bailouts and other policy failures drive us deeper into debt, but they often mask the fact that, even under less volatile conditions, we cannot provide adequate education, healthcare, food and shelter to millions of Americans. As a result, we’ve become so reliant on the wealthy, not only to drive the economy but to give a helping hand to the less fortunate, that we’re vulnerable to a new form of exploitation.

When setting aside money for charitable endeavors, zillionaires, instead of working directly with charity groups, can now place funds in what are called supporting organizations, which regulators and lawmakers suspect are used more for tax planning than the public good. Supporting organizations, like charter school management companies, are attractive because they offer generous tax benefits and allow donors to retain a great deal of control over their money. So, unlike the rest of us who give to charities and expect little to nothing in return, wealthy individuals are essentially creating personal investment vehicles and profiting off honest taxpayers.

Unfortunately, beyond the hypocrisy of these fake philanthropists, there lies a simple mathematical problem. If the cost of bribing the benfactors outweighs the benefits they provide, an already unsustainable economic situation will be made worse. With the holiday season approaching, concerned citizens will be donating to non-profit organizations in support of worthwhile causes. Let’s hope they choose wisely. It also wouldn’t hurt to ask Santa for a politician brave enough to bring back the most effective philanthropy — taxing the rich.